U.S. stocks close down as Sandy hits data

KateGibson

SAN FRANCISCO (MarketWatch) — U.S. stocks continued their recent losing streak Thursday, falling further from multimonth lows as investors gauged the economic impact of superstorm Sandy and the risk of going over the so-called fiscal cliff.

Jobless claims jump

(6:24)

The number of Americans who sought unemployment benefits last week jumped to an 18-month high.

“To the extent we are continuing to see weakness in this marketplace, we’re clearly focused on the storm damage to economic data and businesses, and the more difficult path to come to a bargain by the end of the year,” said Art Hogan, a market strategist at Lazard Capital Markets LLC.

A day after closing at its lowest level since June, the Dow Jones Industrial Average
DJIA, -0.52%
fell for the fourth straight day, shedding 28.57 points, or 0.2%, to close at 12,542.38. The index had been down as much as 0.6% earlier but pared losses in the last hour of trading.

“Another day, another failed bounce. When money managers underperform they have to raise cash and that means they are sellers on rallies. If that doesn’t work they sell at any price,” Eliot Spar, market strategist at Stifel, Nicolaus & Co., wrote in afternoon commentary.

The S&P 500 Index
SPX, -0.38%
finished down for its third day in a row, declining 2.17 points, or 0.2%, to close at 1,353.32, with telecommunications pacing a slide that included 8 out of 10 major sectors.

The finance sector finished in positive territory with People’s United Financial Inc.
PBCT, -0.72%
Federated Investors Inc.
FII, +1.50%
, American International Group Inc.
AIG, +0.59%
and Charles Schwab Corp.
SCHW, +0.36%
among the top gainers.

NetApp Inc.
NTAP, +0.83%
led gains on the S&P 500 overall, with its shares rallying 11% after the maker of data-storage products reported better-than-expected second-quarter earnings.

The Nasdaq Composite
COMP, -0.43%
closed in negative territory for the fourth day in a row, falling 9.87 points, or 0.4%, to 2,836.94.

For every stock that rose more than two fell on the New York Stock Exchange, where 667 million shares traded by the close. Composite volume surpassed 3.4 billion.

Crude moves

Reuters

A New Jersey beach club destroyed by Sandy on Halloween. Jobless claims soar, largely considered a side effect of the superstorm.

The price of oil fell for a third day in four after crude inventories climbed to a three-month high. The crude-futures contract for December delivery
CLZ2, +1.35%
fell 87 cents, or 1%, to settle at $85.45 a barrel on the New York Mercantile Exchange.

Separate reports showed manufacturing in the New York region contracted in November as the storm took out power and curbed activity, and economic activity also declined this month in the Philadelphia area.

“This is the tip of the Sandy iceberg,” said Lazard’s Hogan, who adds that it would probably not be until the first quarter of 2013 before the release of economic reports not impacted by the deadly storm.

President Barack Obama on Friday will gather with Democratic and Republican congressional leaders to start negotiations to reach a deficit-reduction deal. The president on Wednesday met with a dozen corporate executives.

“Right now businesses are starting to make more noise about having to prepare for the fiscal cliff,” said Sorensen of the more than $600 billion in automatic spending cuts and tax hikes that begin in January unless the White House and Congress is able to reach a deficit-cutting agreement.

The unresolved issues are “already having an impact on the economy,” said Sorensen, citing corporate reluctance to hire or invest in technology or other capital expenditures until the deficit issue is resolved.

The stock market began drifting lower after the Federal Reserve announced a third round of quantitative easing in September, with the decline escalating after the U.S. presidential election.

As things stand, there is little to compel investors to jump into the market. “Sideways action and relative low volume is likely until we get some resolution to this, unfortunately,” said Sorensen.

“Any kind of meaningful positive news out of Washington may give us a relief rally,” offered Spar at Stifel Nicolaus.

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